New Delhi: After approving a soft loan of Rs 6,139 crore, the food ministry now plans to seek Cabinet approval to facilitate sugar mills with additional loans worth around Rs 7,000-8,000 crore to enhance ethanol production capacity, government sources said. “In addition to the 114 projects already approved, the plan is to facilitate loans for another 168 proposals by mills. We will be floating Cabinet note to seek loans of around Rs 7,000-8,000 crore,” one of the sources said.
“These loans would cost the government around Rs 1,600 crore as interest subvention,” the source said. Last month, the government had approved 114 proposals by mills across the country for enhancement of ethanol capacity. For these proposals, the Centre will facilitate soft loans worth Rs 6,139 crore to sugar factories, according to an official note.
For mills whose proposals have been approved, interest subvention at 6 per cent a year or 50 per cent of the interest rate charged by banks, whichever is lower, on loans extended by banks will be borne by the central government for five years. The Union Cabinet had, in June, approved measures for sugar mills to enhance their ethanol production capacity by facilitating soft loans worth Rs 4,440 crore to them.
In August, however, the government removed the cap on the loan amount for sugar mills to avail interest subvention. In a first for the country, the government has also approved differential pricing for ethanol based on the quality of molasses used.